We've all heard the term "multiple offers" and it usually means a home has more than one party interested in buying it. There is another way to use that term, however, and it involves buyers instead of sellers. Read on to find out if a buyer can make multiple offers and what might happen if they do.
Why Make Multiple Offers?
In a hot real estate market, the first buyer to make an acceptable offer can win the chance to buy the home. Often, buyers will find offer after offer goes nowhere and they must begin the process all over again. To quicken the process, some buyers locate more than one home they like and place an offer on each home. They then have the option of purchasing the one that is accepted first. If you want to buy a home and wish to cut the waiting process short, multiple offers may be one way to do that.
Can Buyers Make Multiple Offers?
In most cases, there are no laws against buyers placing multiple offers. Sellers won't necessarily know about your other offers unless you choose to tell them. Your real estate agent is bound by ethics not to reveal information about issues like offers, so the information won't come from them. You should know, however, that many real estate agents dislike dealing with multiple offers since it can have negative consequences.
What Could Go Wrong With Multiple Offers?
When you make an offer on a home, you do so using something called earnest money. This is also known as a deposit and the amount of the deposit can be several hundreds or even thousands of dollars. If the deal falls through for some reason, such as the buyer not being able to get financing, the seller refunds the earnest money to the buyer. There are only certain reasons why earnest money can be refunded, however, depending on what the contract says.
In most cases, if a buyer wants to back out of the deal for changing their mind, the earnest money deposit is not returned to the buyer. The seller gets to keep that money in return for the trouble of having to go through the whole process of getting an offer again. While some sellers have backup offers, it's still considered unethical to make an offer on more than one house at a time. When the buyer has multiple offers in, they will likely lose their earnest money for all but one home.
While you should discuss this issue with your real estate agent, it might be better to make a strong offer on one home at a time.